DSL

DSL Prime News Weekly: The Inside Source

The DSL drama continues at Covad, NorthPoint, and others. New technology arrives on the market. The DSL Prime news briefs cover international news, company news, and high-profile job changes.

by Dave Burstein DSL Prime [February 27, 2001]

Sorry for the delay between issues. We've been working hard, including over 40 interviews trying to understand why SBC, a very smart company, chose to raise DSL prices 25%+ when chip and equipment costs are plummeting. Tuesday issues for SBC and also Centillium's look at Japan's 2M lines in 2001.

[Meanwhile GTE's fast DSL connection on Kauai, 100 yards from the beach of your dreams, brought us the news Wiley will publish DSL, A Wiley Tech brief by Jennie Bourne and Dave Burstein in September. But see us sooner—come to the VoDSL conference in New York. I'm chairing it and will keep it lively. db]

Alcatel's own Voice over DSL
Gateway on a 7300 DSLAM card
With a little help from friend TDSoft, Alcatel later this year will deliver a voice over DSL gateway. according to an presentation at a European conference. First targeted at Europe, the goal is to deliver distributed VoDSL right in the telco CO, feeding a local switch. (In the US, Alcatel will continue to work with CopperCom for now, and is in advanced trials at telcos.) Alcatel last year was considering buying a gateway vendor (CopperCom or Jetstream) but the price was too high, so they chose to develop their own product.

The 7300 is a watershed for the industry, a true "next-generation DSLAM" now becoming the standard unit in the major telcos, where Alcatel has two thirds of the world market. A video grade unit with gigabits of backplane speed, processors and control systems capable of IP quality of service and multicasting, optional test capabilities, and interfaces soon to reach OC-12 and beyond.

TdSoft $20M, Arrival $17M, MegaPath $10M
There's still money out there
TdSoft is the early leader in delivering European 5.2 VoDSL, with enormous potential and a deal with Alcatel. Because Alcatel ships more than half the DSLAMs in the world, that deal is transforming the VoDSL market. Founder and CTO Eytan Radian now is building the company in the US—he's one of the most colorful characters in the industry.

Arrival is building a network in California, emphasizing business connections in the areas not well served by Pac Bell. Many feel the industry survivors will be led by companies like Arrival, @Link, New Edge, and IP Communications, if they emerge as the strongest active competitors to the telcos in selected COs.

MegaPath is a business-oriented ISP, where Harry Taxin has emphasized high-quality service from the first, and MegaPath ratings on DSL Reports have always been high.

Copper Mountain's cash gives them time
Revenues shrink dramatically, and future unpredictable
When times got bad for the industry, a common comment was "The good companies will do fine." This was clearly mistaken. Copper Mountain has delivered some of the most reliable DSLAMs in the world, and given customers (and reporters) excellent support. They've been fiscally prudent, and earned a profit. Their partner program was so successful, the rest of the industry copied it.

3Com just sold several million dollars worth of Copper Mountain DSLAMs in an OEM deal, and mPower expanded their purchasing. But the problems of customers like Rhythms, NorthPoint, and JATO cost them much of the quarter's revenue, which McLeod and basement DSLAM orders couldn't compensate for. NorthPoint was acknowledged as the source of the $8M write-off, and inventory/work-in-progress in the tens of millions must be written off. They now need to build international sales, where the market is growing twice as fast as in the US. Paradyne, facing similar problems, has already cut back staff and spending, and is emphasizing international sales—Copper Mountain's conservative financing will give them breathing room to do likewise, and bring a nextgen unit to market.

Siemens takes Efficient for $1.5B
Also investing 100M for new DSLAM plant
Mark Floyd gave us the good news "We plan no layoffs, and I as President of Siemens ICN Access solutions expect to continue to lead and grow the company." Besides a major SBC contract, he's expanding in China and Barzil, where Siemens' international experience will help. Floyd added "Urban China is apartment buildings, allowing rapid growth as we've seen in Korea. Telefonica in Brazil l looks to become a major customer." With Deutsche Telecom aiming at millions of DSL lines, Siemens is preparing to serve—and grow worldwide. Efficient is the leader in modems, and their Flowpoint division was critical in early tests of voice over DSL. The bid is 70% above recent trading, but only a small fraction of last year's value.

Copyright 2001 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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